Product, Services, and Branding Strategy Chapter 8

Learning Goals Understand products and the major classifications of products and services Learn the decisions companies make regarding their products and services Understand branding strategy Identify the four characteristics that affect the marketing of a service Realize additional product issues

Understand products and the major classifications of products and services

Learn the decisions companies make regarding their products and services

Understand branding strategy

Identify the four characteristics that affect the marketing of a service

Realize additional product issues

Produce 7.5 million doughnuts each day Sell more than doughnuts; they sell an experience New store openings are eagerly anticipated in part due to extensive promotion Case Study Krispy Kreme

Produce 7.5 million doughnuts each day

Sell more than doughnuts; they sell an experience

New store openings are eagerly anticipated in part due to extensive promotion

Definitions Product Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want. Service A form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Goal 1: Understand products and their classifications

Product

Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want.

Service

A form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.

What is a Product? Products, Services, and Experiences Market offerings may consist of a combination of goods and services Experiences are used to differentiate offerings Levels of Product and Services Core benefit, actual and augmented product Product and Service Classifications Consumer products and industrial products Goal 1: Understand products and their classifications

Products, Services, and Experiences

Market offerings may consist of a combination of goods and services

Experiences are used to differentiate offerings

Levels of Product and Services

Core benefit, actual and augmented product

Product and Service Classifications

Consumer products and industrial products

What is a Product? Convenience Shopping Specialty Unsought Frequent purchases bought with minimal buying effort and little comparison shopping Low price Widespread distribution Mass promotion by producer Types of Consumer Products Goal 1: Understand products and their classifications

Convenience

Shopping

Specialty

Unsought

Frequent purchases bought with minimal buying effort and little comparison shopping

Low price

Widespread distribution

Mass promotion by producer

What is a Product? Convenience Shopping Specialty Unsought Less frequent purchases More shopping effort for comparisons. Higher than convenience good pricing Selective distribution in fewer outlets Advertising and personal selling Types of Consumer Products Goal 1: Understand products and their classifications

Convenience

Shopping

Specialty

Unsought

Less frequent purchases

More shopping effort for comparisons.

Higher than convenience good pricing

Selective distribution in fewer outlets

Advertising and personal selling

What is a Product? Convenience Shopping Specialty Unsought Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity High price Exclusive distribution Carefully targeted promotions Types of Consumer Products Goal 1: Understand products and their classifications

Convenience

Shopping

Specialty

Unsought

Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity

High price

Exclusive distribution

Carefully targeted promotions

What is a Product? Convenience Shopping Specialty Unsought Little product awareness and knowledge (or if aware, sometimes negative interest) Pricing varies Distribution varies Aggressive advertising and personal selling by producers and resellers Types of Consumer Products Goal 1: Understand products and their classifications

Convenience

Shopping

Specialty

Unsought

Little product awareness and knowledge (or if aware, sometimes negative interest)

Pricing varies

Distribution varies

Aggressive advertising and personal selling by producers and resellers

Product and Service Classifications Consumer products Industrial products Materials and parts Capital items Supplies and services Goal 1: Understand products and their classifications

Consumer products

Industrial products

Materials and parts

Capital items

Supplies and services

Product and Service Classifications Organizations, persons, places, and ideas Organizational marketing makes use of corporate image advertising Person marketing applies to political candidates, entertainment sports figures, and professionals Place marketing relates to tourism Social marketing promotes ideas Goal 1: Understand products and their classifications

Organizations, persons, places, and ideas

Organizational marketing makes use of corporate image advertising

Person marketing applies to political candidates, entertainment sports figures, and professionals

Place marketing relates to tourism

Social marketing promotes ideas

Product and Service Decisions Individual Product Product Line Product Mix Product attributes Quality, features, style and design Branding Packaging Labeling Product support services Key Decisions Goal 2: Learn decisions companies make regarding products

Individual Product

Product Line

Product Mix

Product attributes

Quality, features, style and design

Branding

Packaging

Labeling

Product support services

Product and Service Decisions Product line A group of products that are closely related because they may: function in a similar manner be sold to the same customer groups, be marketed through the same types of outlets fall within given price ranges Individual Product Product Line Product Mix Key Decisions Goal 2: Learn decisions companies make regarding products

Product line

A group of products that are closely related because they may:

function in a similar manner

be sold to the same customer groups,

be marketed through the same types of outlets

fall within given price ranges

Individual Product

Product Line

Product Mix

Product and Service Decisions Individual Product Product Line Product Mix Product line length Line stretching: adding products that are higher or lower priced than the existing line Line filling: adding more items within the present price range Key Decisions Goal 2: Learn decisions companies make regarding products

Individual Product

Product Line

Product Mix

Product line length

Line stretching: adding products that are higher or lower priced than the existing line

Line filling: adding more items within the present price range

Product and Service Decisions Individual Product Product Line Product Mix Product mix Also known as product assortment Consists of all the product lines and items that a particular seller offers for sale Key Decisions Goal 2: Learn decisions companies make regarding products

Individual Product

Product Line

Product Mix

Product mix

Also known as product assortment

Consists of all the product lines and items that a particular seller offers for sale

Product and Service Decisions Individual Product Product Line Product Mix Product mix width: Number of different product lines carried by company Product mix depth: Number of different versions of each product in the line Product mix consistency Key Decisions Goal 2: Learn decisions companies make regarding products

Individual Product

Product Line

Product Mix

Product mix width:

Number of different product lines carried by company

Product mix depth:

Number of different versions of each product in the line

Product mix consistency

Branding Strategy Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service One measure of equity is the extent to which customers are willing to pay more for the brand Brand valuation is the process of estimating the total financial value of a brand Goal 3: Understand branding strategy

Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service

One measure of equity is the extent to which customers are willing to pay more for the brand

Brand valuation is the process of estimating the total financial value of a brand

Branding Strategy Brands with strong equity have many competitive advantages: High consumer awareness Strong brand loyalty Helps when introducing new products Less susceptible to price competition Goal 3: Understand branding strategy

Brands with strong equity have many competitive advantages:

High consumer awareness

Strong brand loyalty

Helps when introducing new products

Less susceptible to price competition

Brand Strategy Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Three levels of positioning: Product attributes Least effective Benefits Beliefs and values Taps into emotions Key Decisions Goal 3: Understand branding strategy

Brand Positioning

Brand Name Selection

Brand Sponsorship

Brand Development

Three levels of positioning:

Product attributes

Least effective

Benefits

Beliefs and values

Taps into emotions

Brand Strategy Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Good Brand Names: Suggest something about the product or its benefits Are easy to say, recognize and remember Are distinctive Are extendable Translate well into other languages Can be registered and legally protected Key Decisions Goal 3: Understand branding strategy

Brand Positioning

Brand Name Selection

Brand Sponsorship

Brand Development

Good Brand Names:

Suggest something about the product or its benefits

Are easy to say, recognize and remember

Are distinctive

Are extendable

Translate well into other languages

Can be registered and legally protected

Brand Strategy Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Manufacturer brands Private (store) brands Costly to establish and promote Higher profit margins Licensed brands Name and character licensing has grown Co-branding Advantages / disadvantages Key Decisions Goal 3: Understand branding strategy

Brand Positioning

Brand Name Selection

Brand Sponsorship

Brand Development

Manufacturer brands

Private (store) brands

Costly to establish and promote

Higher profit margins

Licensed brands

Name and character licensing has grown

Co-branding

Advantages / disadvantages

Brand Strategy Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Line extensions Minor changes to existing products Brand extensions Successful brand names help introduce new products Multibrands Multiple product entries in a product category New brands New product category Key Decisions Goal 3: Understand branding strategy

Brand Positioning

Brand Name Selection

Brand Sponsorship

Brand Development

Line extensions

Minor changes to existing products

Brand extensions

Successful brand names help introduce new products

Multibrands

Multiple product entries in a product category

New brands

New product category

Managing Brands Brands are known through advertising, personal experience, word of mouth, the Internet Everyone in the company represents the brand Companies need to periodically run a brand audit Goal 3: Understand branding strategy

Brands are known through advertising, personal experience, word of mouth, the Internet

Everyone in the company represents the brand

Companies need to periodically run a brand audit

Services Marketing Services Account for 74% of U.S. gross domestic product. Service industries include business organizations, government, and private not-for-profit organizations. Goal 3: Understand branding strategy

Services

Account for 74% of U.S. gross domestic product.

Service industries include business organizations, government, and private not-for-profit organizations.

Characteristics of Services Intangibility Consumers look for service quality signals Inseparability Services can’t be separated from providers Variability Employees and other factors result in variability Perishability Services can’t be inventoried for later sale Goal 3: Understand branding strategy

Intangibility

Consumers look for service quality signals

Inseparability

Services can’t be separated from providers

Variability

Employees and other factors result in variability

Perishability

Services can’t be inventoried for later sale

Service Firm Marketing Strategies The Service-Profit Chain Internal Marketing Interactive Marketing Managing Service Differentiation Managing Service Quality Managing Service Productivity Goal 4: Identify 4 characteristics that affect marketing a service

The Service-Profit Chain

Internal Marketing

Interactive Marketing

Managing Service Differentiation

Managing Service Quality

Managing Service Productivity

Product Decisions and Social Responsibility Acquiring and dropping products Patent protection Product quality and safety Product warranties Goal 5: Realize additional product issues

Acquiring and dropping products

Patent protection

Product quality and safety

Product warranties

International Product and Services Marketing Special challenges: Which products should be marketed internationally? Should the products be standardized or adapted for world markets? Packaging? Goal 5: Realize additional product issues

Special challenges:

Which products should be marketed internationally?

Should the products be standardized or adapted for world markets? Packaging?